1. the other sideof the canvasKeith McGreggorDirector, VentureLab at GTLead Instructor, NSF I-Corps Programwhat investors really need to knowabout the new startup philosophy

2. the new startup philosophy 3. the new testaments 4. CoherenceClarityContext 5. CoherenceClarityContext 6. What is a Startup? 7. A startup is a temporaryorganization designed to search fora repeatable and scalablebusiness model.- Steve Blank 8. Startup CompanyA startup is a temporaryorganization designed to search fora repeatable and scalablebusiness model. 9. Startups SearchCompanies Execute 10. Startup Business ModelCompany Product/Service 11. business planvs.business model 12. business plana place to collect all of your(current) hypotheses andyour rationale for themcover pagetable of contentsexecutive summarybusiness descriptionbusiness environment analysisindustry backgroundcompetitor analysismarket analysismarketing planoperations planmanagement summarynancial planattachments and milestones 13. Business PlansareFICTION 14. "Everybody hasa plan until theyget punched inthe mouth." 15. Five year forecast?MAGICALTHINKING 16. Crystal ball...2007 2013 17. $time 18. $timeYear 3 19. Planning Plan> 20. business modelthe rationale of how an organizationcreates, delivers, and captures value 21. Offer 22. Offer Customers 23. Offer CustomersInfrastructure 24. Offer CustomersInfrastructureFinancial 25. ?? ??????????????FICTION 26. ???? 27. 2006innovation 28. 36the key ideaThere areNO FACTSin the building! 29. 37the big secretConduct100+Interviews 30. 38A manwho carriesa cat by thetail learnssomething hecan learn inno other way. 31. Why do Startups fail? 32. $timeVALLEY OFDEATH 33. $timeVALLEY OFDEATHACTUAL CUSTOMER 34. Startups dont failbecause theyfail to makesomething.Startups failbecause theyfail to makesomethingsomeonewants to buyfrom them. 35. $timeVALLEY OFDEATH 36. Product / Market Fit 37. Product / Market FitFinancial 38. Product / Market FitCOST < REVENUE 39. $timeTRACTION! 40. $timeTRACTION!Profit 41. $timeoops...Profit = Revenue - Cost 42. COST < REVENUE? 43. METRICSVanity 44. Moneyball!METRICSActionable 45. the Pipeline$$$ 46. METRICSAARRR 47. 55the Pirate MetricsAcquisitionActivationRetentionReferralRevenue 48. acquisition activation retention revenuereferral 49. 57SaaS Example 50. $500 / user / month$$$ 51. 59Paid Demand @ $1500 / 1k ClicksOrganic Traffic @ $0.00Google Adwords= $1.50 per Visitor= $0.00 per Visitor 52. 60Paid Demand = $1.50 / VisitorOrganic Traffic = $0.00 / Visitor50%50% 53. 61Cost per Visitor = $0.75 54. 62Cost per Visitor = $0.75Visitor to Raw Lead3% 55. 63Cost per Visitor = $0.75Visitor to Raw Lead3%Raw to Qualified Lead20% 56. 64Cost per Visitor = $0.75Visitor to Raw Lead3%Raw to Qualified Lead20%Qualified Lead Cost =0.750.03 * 0.20= $125 57. 65Cost per Visitor = $0.75Visitor to Raw Lead3%Raw to Qualified Lead20%Closed Deal Cost =0.750.03 * 0.20 * 0.10= $1250Qualified Lead to Closed Deal10% 58. 66Cost per Visitor = $0.75Visitor to Raw Lead3%Raw to Qualified Lead20%= $1250Qualified Lead to Closed Deal10%Marketing CostSales CostMarketing Cost Sales Cost = ? 59. 67VisitorsRaw Leads (RLC)50Qualified Leads (QLC)10Closed Deals (CDC)1Sales CostSales Cost = (1,667 * RLC) + (50 * QLC) + (10*CDC)1,667 60. 68VisitorsRaw Leads50Qualified Leads10Closed Deals1Sales CostSales Cost = (1,667 * $2.00) + (50 * $20. 00) + (10 * $200. 00)1,667= $3,334 + $1,000 + $2,000 = $6,334$2.00$20.00$200.00 61. 693%20%$1,250 + $6,33410%Marketing Cost Sales Cost= $7,584CAC =Customer Acquisition Cost (CAC) 62. 70LTV = ?Lifetime Value of a Customer (LTV) 63. 71Lifetime Value of a Customer (LTV)Average Revenue Per User (ARPU)ARPU =Total RevenueCustomers 64. 72Lifetime Value of a Customer (LTV)Average Revenue Per User (ARPU)ARPU =Total RevenueCustomersGross Margin =Revenue - CostRevenue 65. 73Lifetime Value of a Customer (LTV)LTV = ARPU * Gross Marginnot quite... 66. 74Churnchurn =leavestay 67. 75Lifetime Value of a Customer (LTV)LTV=ARPU * Gross MarginChurn 68. 76Lifetime Value of a Customer (LTV)LTV=0.01Suppose ARPU = $500 per month& Gross Margin = 40%& Churn = 1% per month1%$500 * 0.4= $20,000 69. 77$1,250 + $6,334Marketing Cost Sales Cost= $7,584CAC =LTV=0.01$500 * 0.4= $20,000ARPU Gross MarginChurn 70. Balancing a SaaS model3xCAC < LTVrecover CAC < 12 monthswhy?churn < 3% 71. COST < REVENUEthe equation that matters... 72. ... is this one: CAC